Outgoing US President Donald Trump and Democratic candidate Joe Biden in the fall 2020 presidential election (Photo: Getty Images, Editing: Les Affaires)
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GEOPOLITICAL ANALYSIS. The honeymoon is over with Joe Biden, and our illusions permanently lost on our so-called privileged economic relationship with the United States. Economic nationalism and protectionism among our neighbors are here to stay for the foreseeable future, and we therefore need a “game changer” to get out of this impasse: negotiating a Buy North American.
Essentially, this imaginable North American “local” purchasing policy would integrate public procurement (government supplies) from Canada, the United States and Mexico, as well as projects or programs financed with funds. federal government with our American and Mexican partners.
Several personalities have already raised this idea publicly, including François-Philippe Champagne, Minister of Innovation, Science and Industry, and Véronique Proulx, CEO of Manufacturers and Exporters of Quebec.
To create a Buy North American, it would in fact be necessary to geographically extend the concept of the current Buy American, a provision that encourages the purchase of federal government goods for public use (items, materials or supplies), the value of which is above the micro-purchase threshold.
Technically, it would be possible to reach such an agreement, according to two lawyers specializing in international trade law that I interviewed in 2020 on this subject, Bernard Colas, partner at CMKZ, and Xavier Van Overmeire, partner at Dentons Canada.
In fact, this “continental” policy would be a logical continuation of the gradual integration of the economies and value chains of North America for decades.
First there was the Auto pact (1965 to 2001). It was followed by theCanada-United States Free Trade Agreement (1989-1994) then by theNorth American Free Trade Agreement (since 1994), renegotiated for the benefit of the Americans by the Republican administration of Donald Trump.
Many protectionist irritants
Moreover, there is no shortage of examples over the years to illustrate how frustrating and complicated it can be to trade with our powerful neighbor.
These include repeated taxes on lumber, limited access to infrastructure programs, periodic tariffs on aluminum imports, not to mention now a proposed tax credit for the purchase of electric vehicles assembled in the United States under the Biden administration’s stimulus plan.
But of all the legislative arsenal at the disposal of the American authorities, it is the provisions of the Buy American and you Buy America (for transportation-related purchases over US $ 100,000) that hurt Canadian businesses the most.
And, ultimately, for the economic structure of Canada and Quebec.
Because, quietly, but surely, these two provisions encourage more and more companies from here to invest to set up in the United States in order to serve the American market.
In some cases, Canadian companies are even setting up factories in the northern United States in order to sell their products in the American market and in the … Canadian market – it is less complicated for them.
These are all productive capital investments that could have been made in Canada if we had a normal economic relationship with the Americans.
The tone has changed with Canada, but economic policies remain essentially the same. (Photo: 123RF)
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Binden, Trump, more of the same
When it comes to economic policy, it has become more of the same no matter who, Democrats or Republicans, are in charge in the White House and Congress. Economic nationalism and protectionism have become bipartisan policies in the United States since the Great Recession (2007-2009).
You will tell me that there is still a difference between Joe Biden and Donald Trump. Yes, indeed, you are right: the first has an iron fist in a velvet glove, the second has an iron fist in an iron glove.
In short, apart from the tone that has changed towards Canada since Biden’s election, economic policies remain essentially the same.
Of course, this idea of negotiating a Buy North American is not really on the radar screen in Washington, nor on that of the country’s chambers of commerce nor on that of the heavyweights ofAmerica inc.
On the other hand, the political and economic decision-makers of Quebec, Canada and Mexico do not really have the choice to take up their pilgrim’s staff in order to preach the good news.
Unless we want to act and re-act in this bad movie where we still have to fight in order to preserve reasonable access to the American market.
The example of Brian Mulroney
We would also have every interest in taking inspiration from the former Progressive Conservative Prime Minister Brian Mulroney (September 1984 to June 1993).
In the mid-1980s, he proposed to Republican President Ronald Reagan (January 1981 to January 1989) to conclude a free trade agreement. At the time, it wasn’t really on the radar screen of the political class in Washington, either.
Mulroney really believed in it, and he managed to convince Reagan of the merits of this idea.
We know the rest.
Canadian and American negotiators began talks in May 1986, and reached an agreement 18 months later, in October 1987. Mulroney and Reagan signed the agreement on January 2, 1988, which entered into effective January 1, 1989.
So what are our political and economic leaders waiting for to promote a Buy North American?
And, above all, who will be the next Brian Mulroney?
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